01/31/2012 04:47 pm ET Updated Oct 25, 2012

That Sinking Feeling: Nevada Tops Nation In Homes Underwater

When it comes to indicators on the recession and its aftermath, both Las Vegas and Nevada are at the top of all the bad lists and at the bottom of all the good ones.

But we can't be ostriches, so here comes the latest quarterly report by CoreLogic, showing Nevada still tops the nation in the percentage of houses underwater.

The figure: 58 percent. While this is less than the nearly two-thirds seen as little as eight months ago, it's still bad news. (The top five is rounded out by Arizona, Florida, Michigan and Georgia, which nudged out California for the first time.)

This particular part of the economy is undoubtedly linked to joblessness. Some analysts argue that sinking housing values actually push people out of an area. Others say they may help cause immobility and thus further unemployment, a vicious circle.

Before considering these ideas, let's put Nevada's numbers in context. Nationwide, there are 10.7 million houses underwater, or worth less than what their owners owe the bank. That's down at least 200,000 from the previous quarter, which -- surprise -- is about the number of houses that have slid into foreclosure during the last three months, according to a recent report on household debt from the New York Federal Reserve. It's also 22.1 percent of all mortgages, or nearly 1 in 4.

In Nevada, meanwhile, 58.3 percent of all mortgages are underwater, and another 4.8 percent are approaching negative equity, the technical term. If housing prices continue to slide, which recent news indicates is the case, then that figure should start to rise again.

So what does this mean for unemployment in the valley and the state of Nevada, which also continue to lead the nation? Again, analysts have looked at areas with plummeting housing values and the relationship to state-to-state migration. Back in June, economist Mike Konczal summarized their research: people with high negative equity might have even higher mobility than others, meaning they are more likely to rent out their place or simply walk away.

Which sounds familiar to anyone living in the Las Vegas valley. So the question continues to be, are we losing people who may have skills needed in the near future to diversify the local and state economy?

Elsewhere, Konczal pondered the ties between sinking housing values, foreclosures and unemployment. He wrote:

So unemployment increased more in places with a lot of underwater mortgages in the past year. Question: As the worst mortgage debt in the highest unemployment states continues to be foreclosed on, and no mortgage relief, cramdowns, or inflation is inbound, how much will this become a spiraling problem? Foreclosures depress housing values making unemployment worse increasing foreclosures? The link between how a further local depression in housing values could increase unemployment needs some more causation analysis, but I think there's a real, and worrisome, problem here.

How many more states will end up in a Nevada spiral before this is done?

And, to the concern of those of us who live here, when will the "Nevada spiral" end?

Las Vegas writer Tim Pratt writes a blog, Back To Work, at Nevada Workforce Connections. If you would like to report as a citizen journalist on aspects of the nation's political and economic life where you live, please contact us at .